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Smp Buy Had Mixed Effects on Optical Cable

September 18, 2008

By Duncan Adams duncan.adams@roanoke.com 981-3324

Optical Cable Corp.’s acquisition of SMP Data Communications in May had mixed effects on the fiber optic cable manufacturer’s third- quarter results, which included a jump in net sales and gross profit but a drop in net income for the Roanoke County-based company.

On the positive side, the SMP purchase added $3.3 million to the corporation’s total net sales during the quarter that ended July 31. During the period, total net sales increased more than 40 percent to $16.4 million when compared with the same period last year.

But SMP’s acquisition lowered overall profit margins and also helped increase by about 42 percent Optical Cable’s “selling, general and administrative” expenses, a jump the company attributed also to employee incentives tied to sales.

Profit during the third quarter was $482,000, or 8 cents per share, down from $538,000, or 9 cents per share, during the same period last year.

In a conference call Tuesday, Neil Wilkin, president and chief executive officer of Optical Cable, emphasized that the company’s results — both for the third quarter and for the fiscal year’s first nine months — were positive, especially in the face of a rocky national economy.

During Optical Cable’s first nine months, net sales increased nearly 33 percent to $42.6 million when compared with the first nine months of fiscal 2007. Profit increased to $2.2 million, or 37 cents per share, from $442,000, or 7 cents per share.

Exports continued to boost the company’s sales and, when compared with the same periods last year, increased about 17 percent during the third quarter and about 43 percent during the first nine months.

Optical Cable has 210 employees in Roanoke, and SMP Data employs 110 people in Asheville, N.C.

Tuesday, the price of Optical Cable stock, which trades on the Nasdaq exchange, closed at $4.99, down 81 cents, or 14 percent.

(c) 2008 Roanoke Times & World News. Provided by ProQuest LLC. All rights Reserved.




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